VZCZCXYZ0000
RR RUEHWEB

DE RUEHLB #1107/01 2810755
ZNR UUUUU ZZH
R 080755Z OCT 09
FM AMEMBASSY BEIRUT
TO RUEHC/SESTATE WASHDC 5855
INFO RUEHEE/ARAB LEAGUE COLLECIVE
RUCNMEM/EU MEMBER STATES COLLECTIVE
RHEHAAA/NSC WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/USDOC WASHDC

UNCLAS SECTION 01 OF 02 BEIRUT 001107 
 
SIPDIS 
 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: ECON ECPS EFIN EIND PGOV LE
SUBJECT: INCREASED BANK DEPOSITS: BLESSING OR CURSE? (ECONOMIC WEEK 
IN REVIEW, SEPTEMBER 28 - OCTOBER 4, 2009) 
 
BEIRUT 00001107  001.9 OF 002 
 
 
CONTENTS 
-------- 
 
-- INCREASED BANK DEPOSITS: BLESSSING OR CURSE? 
-- FIRST RIGHT TO KNOW DAY IN LEBANON 
-- AGRO EXPORTS EXCEED 200,000 TONS IN FIRST HALF OF 2009 
-- LEBANON IMPROVES IN INDUSTRIAL COMPETITIVENESS INDEX, 
INDUSTRIALISTS COMPLAIN ABOUT SUBSIDIZED COMPETITION 
 
 
INCREASED BANK DEPOSITS: 
BLESSING OR CURSE? 
------------------------ 
 
¶1. (U) As Lebanon reports a $14 billion increase in bank deposits in 
the first eight months of 2009, prominent local economists have 
publicly characterized increased deposits as a double-edged sword 
for local banks.  Head of Research at Byblos Bank Nassib Ghobril 
noted that since depositors continue to convert dollar deposits to 
Lebanese pounds to benefit from higher pound interest rates, bank 
profits will likely take a hit in 2009.  As banks are already highly 
exposed to sovereign risk through their government debt holdings, 
finding new investment tools (mainly in the Gulf) to cover deposit 
costs may be more difficult in the light of the effects of the 
global crisis in that region, Ghobril said. 
 
¶2. (SBU) Meanwhile, general manager of Al Mawarid Bank Marwan 
Kheireddine told us September 29 that the Lebanese banking sector is 
very conservative in its lending policies.  The bulk of loans are 
extended to major businesses and corporations, as opposed to SMEs, 
startups, and the industrial and agricultural sectors.  Kheireddine 
noted that the slow judicial process in settling client default 
cases discourages banks from expanding their lending base. 
 
FIRST RIGHT TO KNOW DAY 
----------------------- 
 
¶3. (U) On September 29, International Right to Know Day was 
celebrated for the first time in Lebanon, under the auspices of the 
National Network for the Right of Access to Information.  The 
network, established in April 2008, includes Lebanese 
Parliamentarians against Corruption (LebPAC), the Lebanese 
Transparency Association (LTA), ministries, and NGOs, in 
collaboration with the American Bar Association's Rule of Law 
Initiative in Lebanon.  The network helped draft the access to 
information draft law introduced to parliament in April 2009 and is 
currently working on a draft law for whistleblower protection. 
 
¶4. (U) During the press conference, Minister of State for 
Administrative Reform Ibrahim Shamseddine expressed disappointment 
at the small number of MPs in attendance.  Minister of Interior Ziad 
Baroud noted the lack of a cabinet since the June parliamentary 
elections is not an excuse to stop working on increasing 
transparency through greater citizen access to information as a 
means of fighting corruption.  According to Transparency 
International's 2008 Corruption Perception Index, Lebanon ranked 102 
out of 180 countries, down from 99 in 2007, and 11 out of 20 MENA 
countries, in terms of perception of corruption. 
 
AGRO EXPORTS EXCEED 200,000 TONS 
IN FIRST HALF OF 2009 
-------------------------------- 
 
¶5. (U) The Investment Development Authority of Lebanon (IDAL) 
announced it would pay 30% of dues and obligations to farmers 
exporting their agricultural products under the Export Plus program 
for 2008.  IDAL has paid farmers a total of 60% of dues to date. 
IDAL noted agricultural exports for the first half of 2009 reached 
203,000 tons, 41% of which were oranges, followed by bananas (15%) 
and apples (14%).  31% of the exports under the Export Plus program 
went to Syria, while Saudi Arabia received 17% and the UAE 8%. 
Launched in 2001, Export Plus seeks to increase exports by 
subsidizing the transport of certain agricultural goods and 
overseeing quality and compliance with international standards. 
Subsidies have been decreased gradually since 2006 and are expected 
to be completely phased out by 2011. 
 
LEBANON IMPROVES IN INDUSTRIAL 
COMPETITIVENESS INDEX 
------------------------------ 
 
¶6. (U) Lebanon ranked 61 out of 122 countries worldwide in the 
latest UN Industrial Development Organization's (UNIDO) Competitive 
Industrial Performance Index, up from 71 in the 2004 index.  Within 
the MENA region, Lebanon ranked 6 out of 14, up from 7 in the 
previous survey.  The index measures the ability of countries to 
 
BEIRUT 00001107  002.2 OF 002 
 
 
produce and export manufactured goods competitively. 
 
¶7. (U) Meanwhile, the vice president of the Association of Lebanese 
Industrialists (ALI) publicly noted the GOL was not doing enough to 
support Lebanese industries, which are struggling with competition 
from neighboring countries that subsidize the main factors of 
production, such as energy and land.  Lebanon's largest ceramic 
tilemaker, Uniceramic, unable to compete with imported products 
whose manufacturing costs were 73% less, declared bankruptcy last 
week following years of gradually scaling down production and 
reducing staff, according to press reports. 
 
SISON